Insured Can’t Pass Its Mistake to the Broker

Insurance Broker Sued for Doing What the Insured Asked It to Do

The primary duty of an insurance agent or broker is to fulfill the orders presented to the agent or broker by the insured. If it errs in fulfilling the order it can be held liable. If it performs the order as requested it has no responsibility. In Homestretch Logistical Solutions, Inc. v. Johnson Lawrence Walker Insurance Company, Court of Appeals of Kentucky, 2017 WL 729747, NO. 2014-CA-001255-MR (2/24/17) an insurance agent was sued for doing exactly what it was asked to do by the insured that resulted – because of the insured’s error – in an accident where a vehicle was uninsured.


Homestretch Logistical Solutions, Inc. (“Homestretch”), appealed the dismissal of its action against Johnson Lawrence Walker Insurance Agency (“JLW”).

Homestretch is a shipping company operating a fleet of semi-trucks, a number of which are leased from Penske Truck Leasing (“Penske”). Pursuant to its leasing agreements, Homestretch was obligated to maintain collision and comprehensive insurance coverage on all trucks leased from Penske. Homestretch engaged JLW to procure insurance coverage to satisfy the lease requirements which JLW performed the request and insured all leased Penske trucks without problem.

On April 23, 2013, a collision caused substantial damages to a 2011 Freightliner truck leased by Homestretch from Penske. Homestretch filed a claim under the insurance policy but National (the Insurer) denied the claim, stating the truck in issue had been specifically removed from the policy coverage on March 13, 2013, pursuant to instructions from JLW. Throughout this time period, Homestretch had paid National monthly premiums for the 2011 Freightliner as if it were covered.

After the accident it was discovered that the 2011 Freightliner was mistakenly removed from the policy because, Homestretch returned a 2012 Freightliner to Penske and sought to have it removed from the insurance policy. However, in an email to JLW, Homestretch erroneously identified the returned vehicle as the 2011 Freightliner which was damaged in the April collision.

Homestretch sued JLW and National accusing both of breach of contract and violation of the Unfair Claims Settlement Practices Act (“UCSPA”). It also asserted claims of negligence against JLW, and bad faith and violations of the timely settlement requirements required by Kentucky statutes.

Rather than answering the complaint, JLW moved to dismiss the action against for failure to state a claim upon which relief could be granted.

Based on these allegations, Homestretch contended the Complaint adequately set forth claims of negligence and breach of contract against JLW. Finally, because discovery had not yet commenced, Homestretch argued the motion to dismiss was premature and a waste of judicial resources. JLW replied, asserting Homestretch failed to address—and thereby conceded—the deficiencies in the bad faith claim. It noted Homestretch had not argued JLW was a party to the insurance policy nor that JLW had a contractual obligation of any kind to pay Homestretch’s claim under the policy issued by National. As it was not a party to the contract, JLW argued it could not be held liable for any breach thereof. Finally, JLW noted Homestretch admitted in its complaint that it sought to remove the 2012 Freightliner from the policy but identified the wrong vehicle in its communications with JLW, thereby negating any potential claims of negligence by JLW for removing the vehicle Homestretch directed to be removed as such action was based on and strictly complied with Homestretch’s express directions to do so.

The trial court agreed with JLW, finding the sole contract at issue was the insurance policy between National and Homestretch, to which JLW was not a party and could not therefore be held liable for any breach thereof. Likewise, because JLW was not an insurer, nor did it manage or control the disposition of Homestretch’s underlying claim, no action could lie against it for bad faith or violation of the UCSPA.

On Homestretch’s negligence claim, the trial court found JLW breached no duty owed to Homestretch and the erroneous removal of the 2011 Freightliner from the insurance coverage was caused solely by Homestretch’s own negligence and mistake, thereby relieving JLW of any potential liability. The trial court also determined Homestretch’s claim for punitive damages failed as a matter of law as no allegations of intentional misconduct or reckless disregard of Homestretch’s rights as an insured had been advanced pertaining to JLW. Having found no possible avenues of relief against JLW, the trial court granted JLW’s motion to dismiss.

Homestretch advances no argument the trial court erred in dismissing its claims for JLW’s alleged violations of the UCSPA or for punitive damages. Accordingly, the trial court’s judgment is affirmed as confessed in those respects.


Under Kentucky law, parties may only sue for a breach of contract if privity of contract existed. The proposition that privity of contract is the relationship between parties to a contract that allows them to sue each other but prevents a third party from doing so. In this action, there is no contract between Homestretch and JLW, as the trial court correctly found. The sole contract at issue is the insurance policy issued by National intending to cover Homestretch.  JLW’s name does not appear anywhere on or in the policy. Because JLW is not a party to the contract, no privity exists between it and Homestretch. Thus, Homestretch has no right to recover damages from JLW for any alleged breach of the insurance policy. Dismissal was proper.

Homestretch next argues the trial court erroneously concluded Homestretch’s mistake in identifying the 2011 Freightliner as the vehicle to be removed from the insurance coverage was the only negligent action involved in the instant suit. Homestretch attempts to shift liability to JLW based on a theory that JLW carelessly undertook its duty of ensuring Homestretch’s insurance needs were satisfied. In essence, Homestretch asked the trial court—and now this Court—to save it from its own mistakes.

The only alleged duty owed by JLW to Homestretch was to use reasonable care in procuring insurance coverage for the fleet. Homestretch admits JLW procured insurance through National and all of its vehicles were covered—including the 2011 Freightliner. It contends JLW breached its duty by carelessly removing a vehicle from the policy, subsequently resulting in damages to Homestretch.

As the trial court correctly concluded, JLW did exactly what it was tasked to do. It followed the explicit directions given by Homestretch to inform National to remove the 2011 Freightliner from the insurance policy.

Contrary to Homestretch’s assertion, the court could not say that JLW breached its duty nor that its actions were the legal cause of any injury incurred by Homestretch.

The financial losses sustained following the collision involving the uninsured 2011 Freightliner were occasioned solely because of Homestretch’s own actions and instructions.


JLW did exactly what it was asked to do. The suit, the trial court decision and the appellate decision made clear that an insured cannot sue its agent for failure to protect it against its own error in asking the wrong truck to be removed from its policy. No court, and certainly not this Kentucky court, will save a plaintiff from its own mistakes.

ZALMA-INS-CONSULT                      © 2017 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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